Call it one more sign that Nashville’s red-hot housing market could be slowing down.
Or filling a demand, depending on how one sees it.
Recent statistics compiled by RealtyTrac in its Midyear 2007 U.S. Foreclosure Market Report show a total of 925,986 foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 573,397 properties nationwide during the first six months of the year. RealtyTrac publishes the largest and most comprehensive national database of foreclosure and bank-owned properties in the U.S.
Nationally, that’s up more than 30 percent from the previous six-month period and up more than 55 percent from the first six months of 2006. The report also shows a foreclosure rate of one foreclosure filing for every 134 U.S. households for the first half of the year.
And Tennessee figures were no exception to the trend.
Tennessee, in the latest study, ranks 12th in the U.S. in foreclosures, with 1 filing for every 123 households.
In all, there were 21,447 foreclosure filings against Tennessee homeowners in the first six months of 2007. That’s a 22-percent rise from the last six months of 2006 and a 12-percent increase from the first six months of 2006.
In Davidson County, RealtyTrac showed that 259 homes are currently in some type of pre-foreclosure status, while there are 1,327 properties that have gone back to bank ownership.
Another 144 properties are awaiting auction due to foreclosure proceedings.
Altogether, Davidson had 1,726 foreclosure filings in the first half of 2007, a 35 percent increase over the 1,279 filings recorded by RealtyTrac in the first half of 2006.
Local Realtors said the storm clouds have been gathering toward the foreclosure.
“Irresponsible lending” to people who previously wouldn’t have been considered credit-worthy, along with bundling all down payments, closing expenses and other home-buying fees into those loans — on top of the home price — were all warning signs, said Richard Courtney, managing broker for Fridrich & Clark and president of the Greater Nashville Association of Realtors.
“You could see this coming for some time. This is a result of that type of lending,” said Courtney.
The foreclosures also give a double-whammy to the local housing market. If foreclosures suddenly flood the market, Courtney said, one effect would be depressed home prices across the board.
And — because of the questionable lending practices — many banks are foreclosing on properties that have fees and other expenses often thousands of dollars over the home’s worth. That keeps the price of the home too high, unless someone is willing to cover the loss.
“The bargains aren’t there for investors, because the price is more than the home is worth,” said Courtney.
There was one silver lining, however. Because many, if not most, foreclosures are on lower-priced houses, Courtney said they could ease the crunch in the “affordable housing,” $160,000-and-lower price point.
“We probably have the demand to handle that,” said Courtney. “Some of that inventory might be welcome.”